Sept. 26 (Bloomberg) — Spain’s government bonds fell, with 10-year yields rising to more than 6 percent, after top-rated European countries said national authorities should bear the cost of earlier losses in their banking industry.
Irish and Italian securities also declined as Germany, the Netherlands and Finland said yesterday the region’s bailout fund, the European Stability Mechanism, should assume only a limited burden in bank recapitalizations. Spanish notes dropped for a second day after Catalan President Artur Mas called for early elections yesterday in a bid to seek greater regional autonomy. German bunds advanced even as the nation attracted fewer bids than its target as it sold 10-year debt.
“There’s an ongoing drip feed of negative news,” said Richard McGuire, a fixed-income strategist at Rabobank International in London. The ESM announcement “appears to cast some doubt as to whether Spain will be able to disburden itself of the liabilities it will assume via its banking bailout.”
Spain’s 10-year yield rose 25 basis points, or 0.25 percentage point, to 6 percent at 12:23 p.m. London time. It earlier rose as much as 30 basis points, the biggest increase since Aug. 31. The 5.85 percent bond due in January 2022 fell 1.755, or 17.55 euros per 1,000-euro ($1,286) face amount, to 98.94.
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